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NetApp's Point of View on the Sun Litigation - An Update
Sunday, October 26 2008 @ 09:07 PM EDT

Dave Hitz, CEO at NetApp, has posted his view on the latest happenings in the NetApp v. Sun patent litigation. Sun's General Counsel, Mike Dillon, recently described the outcome of the Markman hearing, which Sun was pleased with, and he also announced that the USPTO has agreed to reexaminations of several of NetApp's patents, including agreeing to a reexamination of the '292 patent [Order]. Hitz says NetApp has more patents even if these are invalidated, and he asks some questions which I'd like to answer. He questions the motives behind Sun's request to the court for a stay in the proceedings while the validity of the patents are decided. He seems to view that as Sun dragging its feet, and he asks if Sun's request indicates a lack of confidence in its position. I'll bet your answers will be a lot like mine, particularly if you've had your SCO inoculations.

Here are his questions:
If you were Sun, and if you were confident in your case, wouldn’t you want to clear the name of ZFS as quickly as possible, to reassure your customers and partners? By contrast, if you were NetApp, and you had no confidence in your patents, wouldn’t you try to slow things down to maintain the cloud of doubt as long as possible? I believe we have a strong case, but whether we are right or wrong, isn’t it best for everyone involved to get the answer as quickly as possible?
Normally, you might think so. But don't you remember the Blackberry patent mess, where the court forced a settlement by refusing to wait for the USPTO to decide with finality if the patents were even valid? RIM's defense was that the patents were not valid, and it had applied for reexamination to the USPTO. A jury meanwhile had ruled in its wisdom in 2002 that RIM had infringed the NTP patents as alleged, but then later, lo and behold, in 2005 and 2006, while the litigation was in end game, the USPTO began announcing that at least some of the patents were not valid, but too late to matter in the litigation. The judge refused to wait, because of the likely appeal, and RIM was confronted with a horrible choice, be shut down immediately by the court while it waited for a final decision on the patents or pay money it felt was not appropriate for patents it believed were invalid:
The post-patent review process can also be very lengthy. The review of the NTP patents, which began in 2003, was still going on as the potential BlackBerry shutdown loomed in 2006. Even as the USPTO issued orders in late 2005 and early 2006 declaring the patents invalid, appeals of those orders would have served to keep the patents intact for years.

This became one of the central controversies arising from the BlackBerry settlement: From RIM’s perspective, the firm paid more than $600 million to use a technology that the government said was not validly patented. From NTP’s perspective, however, the patents remained valid unless (and until) a final court determination, and RIM was rightfully paying for its use of NTP’s technology.

I'm thinking if I were Sun and I was confident that the eventual decision from the USPTO was going to be a rejection of the patents NetApp claimed are being infringed, I'd prefer to wait. Is that not logical, and in fact Dave says that is what's behind the request, but he gives it a twist in meaning:

To me, the best indicator of strength is to look at which party wants to get on with the case (the one with a strong position), and which party consistently drags its feet and tries to delay (the one with the weak position).

Sun is requesting a “stay,” which is a request to put our claims on hold and delay the trial, because the Patent Office has issued a preliminary rejection of claims in 3 of our patents (out of 16). Such a ruling is not unusual for patents being tried for the first time, and there are two ways to resolve the issue. Waiting for the Patent Office, which is what Sun wants to do, is the slow way. The patent office currently has a backlog of 730,000 patents, and they can’t hire fast enough to close the gap. Waiting could take years. The legal system isn’t always fast, but it can be. When NetApp agreed to relocate the case to California, we did it on the condition that we’d get to trial relatively quickly. Dillon mentioned issues with three patents, but NetApp currently has 16 WAFL patents that we believe apply to ZFS, with more on the way. We believe that we have a strong case, and we want to get it resolved.

I think it's four now, actually, unless I've miscounted. But here are some questions for NetApp:
  • Are you not suggesting something similar to the RIM outcome?

  • If the court does not wait to find out if your patents are valid, might Sun be forced to pay you for patents that later turn out to be invalid?

  • Would that be fair?

  • And deeper, if the USPTO issues lots of stupid patents, and we know it does, believing that any difficulties can be ironed out later by litigation, if that later litigation can't wait for the necessary analysis, doesn't the patent system become a game-able hustle for plaintiffs with questionable patents?

  • To speed things up, would you be willing to stipulate to a final order, waiving any and all appeals, that the patents the USPTO has announced are probably invalid are in fact invalid and rely going forward only on the patents that are not currently in dispute?

  • If not, and if the positions were reversed and you were in Sun's shoes, would you be in a hurry? Reeally?

  • Why would anyone want to take patents to trial before it has been definitely determined whether or not they are valid?
Those of us who got our SCO booster shots also know that claims by a party in litigation that the other side is dragging its feet might or might not be true. I don't even need any more SCO shots, by the way. I'm immune. For life.

Of course, the most fundamental question is whether software patents actually work out at all. Do they encourage innovation or block it? Red Hat is asking those questions:

But the success of FOSS shows that, at least in the software area, the patent system is seriously flawed. FOSS innovations have changed the world of technology dramatically, but is implausible to suppose that they have been inspired by hope of receiving a patent. No FOSS developer wishes to exclude others from their invention by obtaining a patent. Instead, FOSS developers share their code freely. Moreover, the public gains nothing from a FOSS patent, because, by definition, the source code is freely available without reference to a patent disclosure. In terms of motivating FOSS inventors or spreading FOSS knowledge, the patent system contributes precisely nothing.

For the FOSS community, the problem is not so much that patents are failing to serve their intended purpose of promoting innovation. The history of FOSS shows that innovation happens in spite of poorly conceived legal rules. The real concern is that patents may actually hinder software innovation. There are now more than 200,000 software patents, and there is no practical way to be sure that a new program does not infringe one or more of them. A patent lawsuit can cost several million dollars in attorneys’ fees. The risk of patent litigation is one that the FOSS community has learned to live with. But it hardly seems likely that the risk is doing anything other than inhibiting software innovation.

The issue here is more than academic. The patent system we have today was based on a theory of innovation that, at least in the FOSS area, is simply wrong. If we want to encourage innovation, we need to test the theory with empirical research. We should bring the tools of economics and other social sciences to bear to clarify what forces encourage innovation and what forces hinder it. Where the patent system is not performing its intended function, what changes are needed? Are there effective incremental reforms for the software patent problem, or do we just need a new system?

I vote for a new system, frankly. This one, as the NetApp-Sun litigation is just the most recent proof, is seriously broken.


NetApp's Point of View on the Sun Litigation - An Update | 151 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Correktions here please
Authored by: gjleger on Monday, October 27 2008 @ 06:12 AM EDT
Use title please.

[ Reply to This | # ]

Off Topic here
Authored by: gjleger on Monday, October 27 2008 @ 06:13 AM EDT
Rants and other stuff

[ Reply to This | # ]

Newspicks comments here.
Authored by: gjleger on Monday, October 27 2008 @ 06:14 AM EDT
Comments/Discussions about Newspicks items, line up below please!

[ Reply to This | # ]

1st to File Patents make this even worse?
Authored by: Anonymous on Monday, October 27 2008 @ 07:31 AM EDT
One has to question that if a company had a "trade secret" (like the
Coke formula) that they did not want to patent, but are protected anyway with
"FIRST TO INVENT"... that, a First to File patent system would allow
someone else to come up with the formula (or one close to it), patent it and
attack the "trade secret" position of the other company where in order
to defend the trade secret the original company will have to expose it's trade
secret in court to prove that they are not infringing on the other's patent.

With FIRST TO USE, then the trade secret is protected AS they have used this
formula well before the time that the other patented theirs.

Same is true of "secret" company computer security designs, where they
don't patent because they don't want others to know HOW THEY ARE securing their
systems. So, it is an internal trade secret. AND they have first to use
protection of that tactic, or design, that they are using!

First To File is not a good direction. First To USE is better in all ways.

Of course, with Software, there should be no software patents at all as it is
all math, and really the limits as to what you can do, and can't do, with
software, are limited by chip design, and are already OBVIOUS because the
parameters of what you can and can't do are defined by the logic of chip design.

[ Reply to This | # ]

You know who else wants to get things settled quickly?
Authored by: Anonymous on Monday, October 27 2008 @ 07:50 AM EDT
To me, the best indicator of strength is to look at which party wants to get on with the case (the one with a strong position), and which party consistently drags its feet and tries to delay (the one with the weak position).
Sun is requesting a “stay,” which is a request to put our claims on hold and delay the trial...We believe that we have a strong case, and we want to get it resolved.

Conmen, that's who.

This all sounds like nothing so much as one of those guys pressing you to turn over money before you've started thinking the con through, and realizing you're about to get took.

I mean, really. He states these conclusions, yet I come to the exact opposite conclusions he does, based on the same behavior. The patent holder almost always has more to gain by waiting for their patents to be proved out by the USPTO than the defendant does. Unless of course, you know, the patent holder is actually shipping a competing product and is struggling to make payroll, in which case, we'd likely see TRO's being issued.

Now, like all matters in trial this does change on a case by case basis, but I would expect it to be true in general.


[ Reply to This | # ]

The meaning of the USPTO stamp of patentability.
Authored by: Anonymous on Monday, October 27 2008 @ 09:28 AM EDT

Considering also the fact that the courts must - by default - initially defer to the patentability of a particular invention as stamped by the USPTO, one must certainly question the wisdom of taking to trial a patent which is currently being questioned by the USPTO.

Prior to the stamp, the inventor must prove the invention is worthy of patentability. A line which seems very easy to cross considering the quality of the patents being granted.

After the stamp, the defendant must prove the patents invalidity. An effort significantly more costly when issolated to the USPTO itself, drastically more costly when the court is involved.

Anyone know if such a study has been performed? The cost questions would be:

    On average, how much does a patent holder spend to get a given invention stamped as a patent - not counting R&D and invention costs but strictly the costs to get the USPTO stamp?
I ask without R&D considering the amount of patents being stamped when you know they didn't spend a dime on R&D beyond having a few people brainstorm ideas. So the costs would include such things as:
    Research of patents to identify which patents don't actually exist (do they even do this considering trebble damages and the desire to avoid such damages?)
    Costs of having the filing written and re-written until it's stamped approved.
Compared with the costs of defending a patent:
    Hiring specialized researchers to examine a patent seeking prior art in numerous areas of science.
    Discovery costs.
    Costs inherent in the exposure of potential trade secrets which would not have been made available except through discovery (made un-necessary for faulty patents).
I'm thinking the costs of getting a patent (not counting r&d which can very drastically depending if actual research is even performed) can be measured in the 100's thousands while the defense of such patents can be measured in the millions.

Take into consideration that the damages that will be awarded will also include the length of time Sun had infringed the patents and it's a certainty NetApp will "ultimately be paid".

In short, if NetApp is wronged they have very little to loose. If Sun is wronged they have a significant amount to loose. A Just system is one that would be balanced with regards risk and return. I'd suggest the only reason NetApp would be so insistent on getting a court to Judge would be due to the fact NetApp is less certain their patents will ultimately be found valid.


[ Reply to This | # ]

Corrections here please (non-anonymous)
Authored by: Winter on Monday, October 27 2008 @ 09:57 AM EDT
Post corrections here. Please change the Title: field to indicate the
correction. Thanks.

Some say the sun rises in the east, some say it rises in the west; the truth
lies probably somewhere in between.

[ Reply to This | # ]

Software Patents with short life cycles
Authored by: DodgeRules on Monday, October 27 2008 @ 10:29 AM EDT
I have read PJs view of software patents, as well as others, and I agree up to a
point that software patents are not good. But on the other side, if a company
develops the next best software program idea and spends lots of R&D money to
get it right, they should not have to worry about another company (open source
included) to quickly clone their work while the original company gets stuck with
the cost of the trial and error of getting it just right.

That being said, to balance the two sides, what if software patents were allowed
for a maximum of 5 years to give the innovator the opportunity to recover their
costs and refine their product/idea while making money off of the exclusivity of
their product/idea. After the 5 year time, other people and companies are free
to attempt to make their own versions of the product, possibly making it even

Wouldn't this promote innovation by giving the creator a 5 year protection on
their product and give them the opportunity to cash in on their idea, while
still allowing others to market their own versions 5 years later?

And sorry, software patents with the 5 year shelf life can not be extended by
modifying the original patent to create something new.

[ Reply to This | # ]

Patents - Historical Questions...
Authored by: Anonymous on Monday, October 27 2008 @ 12:56 PM EDT
At any time in the past, did the USPTO require "working models" of the

device/instrument being patented?

Way back when it cost a lot to prototype a device or system to file and filing
was, I believe, rather less expensive than it is, today, even taking inflation
into account.

It strikes me that, at some point, patents became "speculative", as in
"this is
how it COULD work" not "see? it works just like this!".

Beyond that, I'm wondering...

I've a non-software patent that was filed and the application published...
what happens next? (It does not help that it was filed through IBM and then I
was laid off last year.)

[ Reply to This | # ]

NetApp's Point of View on the Sun Litigation - An Update
Authored by: rsteinmetz70112 on Monday, October 27 2008 @ 01:17 PM EDT
It seems to me NetApp is in a strong position, the courts very likely will take
the patent at face value and not look at prior art.

If NetApp were to win and get an injunction then Sun suffers severe damage,
possibly not an much as RIM because ZFS is not their entire business.

NetApp is also not likely to go out of business, so why not wait and get it

Judicial Economy woudl seem to argue that the Patent Office complete their
process before the courts take up the case. Anything else would seem to cost
more and not take any less time.

I wonder if NetApp would stipulate that is the patents were ruled invalid they'd
give the money back?

Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Hitting the nail on the head
Authored by: Anonymous on Monday, October 27 2008 @ 08:33 PM EDT
Why would anyone want to take patents to trial before it has been definitely determined whether or not they are valid?
One of your best ones, PJ.
Why indeed?

[ Reply to This | # ]

NetApp's Point of View on the Sun Litigation - An Update
Authored by: Anonymous on Monday, October 27 2008 @ 11:42 PM EDT

I recall the days when workstations from Sun, SGI, etc. cost as much as $100,000
in times when that was a lot more money than it is today.

While NetApp is indeed a solid product line with excellent support mechanisms,
the organisarion is also addicted to extremely expensive pricing models as the
basis of their business model.

Sadly for them, those times are coming to a close due to the normal processes of
markets evolving to produce the same or better functionality for a whole lot
less money.

The strategy they're taking thus seems essentially a kind of rear-guard action,
based perhaps on the incorrect perception that they still have a tenable pricing
position in the long term.

We've seen it all before; good luck, and good night ...

[ Reply to This | # ]

Authored by: Anonymous on Monday, October 27 2008 @ 11:49 PM EDT
It's funny that so many people agree that it's dangerous for the US economy to
be based on artificial rights like IP that can be easily duplicated, while
insisting that the solution is to give them increased protections. Which, of
course, would only encourage people to base even more of our economy on this and
which would dig us deeper into the hole.

So they go for this ridiculous protectionism rather than basing our economy on
real goods rather than imaginary ones. I really need to have a talk with my
broker to move more of my assets to other countries. Fortunately, I was already
well invested in equities rather than securities so the recent meltdown hasn't
hit me as badly as it could have.

But if this continues, I can only expect further meltdowns when people finally
manage to make a big enough bubble out of imaginary goods to cause it to

[ Reply to This | # ]

  • Protectionism - Authored by: Anonymous on Tuesday, October 28 2008 @ 12:03 AM EDT
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